FINAL ACCOUNTS OF COMPANIES Chapter IX, sections 128 to 138 of the Companies Act,2013 deals with the legal provisions relating to the Accounts of Companies. These sections including Schedule II and III were brought into force from 1st April 2014. Financial Year “Financial year”, in relation to any company or body corporate, means the period ending on the 31st day of March every year. Financial statements 1956 Act does not define the term “Financial Statement”. 2013 Act defines the term “financial statement” in relation to a company to include: (i) a balance sheet as at the end of the financial year; (ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year; (iii) cash flow statement for the financial year; (iv) a statement of changes in equity, if applicable; and (v) any explanatory note annexed to, or forming part of, any document referred to in sub clause (i) to sub-clause (iv): Provided that the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement. Preparation and Presentation of Financial Statements Section 129 of the Companies Act 2013 governs the preparation and presentation of financial statements of the company. The financial statements shall give a true and fair view of the state of affairs of the company or companies, comply with the accounting standards notified under section 133 and shall be in the form or forms as may be provided for different class or classes of companies in Schedule III. SCHEDULE III OF THE COMPANIES ACT, 2013 According to Section 129 of the Companies Act 2013, all the companies registered under this Act will have to present its financial statements in Schedule III of the Act. The Schedule III of the Companies Act 2013 has been formulated. It deals with the Form of Balance sheet, Statement of Profit and Loss and disclosures to be made therein and it applies uniformly to all the companies registered under the Companies Act, 2013, for the preparation of financial statements of an accounting year. It has several new features like: A vertical format for presentation of balance sheet with classification of Balance Sheet items into current and non-current categories. A vertical format of Statement of Profit and Loss with classification of expenses based on nature. Elimination the concept of “Schedules” and such information is now to be furnished in terms of “Notes to Accounts”. It does not contain any specific disclosure for items included in Schedule VI under the head, “Miscellaneous Expenditure”. As per AS-16 borrowing cost and discount or premium relating to borrowing could be amortized over loan period. Further, share issue expenses, discount on shares, discount/ premium on borrowing, etc. are excluded from As-26. These items be amortized over period of benefit i.e., normally 3-5 years. The draft guidance note issued by ICAI suggests that unamortized portion of such expenses be shown under the head “Other Current/Non-current Assets” depending on whether the amount will be amortized in the next 12 months or thereafter. Debit Balance of Statement of Profit & Loss A/c will be disclosed under the head, Reserves & Surplus as the negative figure. No change in the format of cash flow statement as per revised schedule and therefore its preparation continue to be as per AS-3 on cash flow statement. It gives prominence to Accounting Standards (AS) i.e. in case of any conflict between the AS and the Schedule, AS shall prevail. PRESENTATION OF BALANCE SHEET A Balance sheet is a statement of the financial position of an enterprise as at a given date, which exhibits its assets, liabilities, capital, reserves and other account balances at their respective book values. KEY FEATURES OF BALANCE SHEET 1) The Schedule III permits only Vertical form of presentation. 2) It uses “Equity and Liabilities” and “Assets” as headings.
Posted on: Sat, 06 Dec 2014 12:43:41 +0000
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